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Interval Leisure Group Announces Changes in Financial Reporting Segments

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Interval Leisure Group (Nasdaq: IILG) (“ILG”) today announced it has made changes to its financial reporting segments to align with its reorganized management reporting structure as a result of the acquisition of Hyatt Vacation Ownership (HVO).

The new reporting segments are: Exchange and Rental, and Vacation Ownership.

Exchange and Rental offers access to vacation accommodations and other travel-related transactions and services to leisure travelers, by providing vacation exchange services and vacation rentals, working with resort developers and operating vacation rental properties.

The Exchange and Rental operating segment consists of Interval International (referred to as Interval), the Hyatt Residence Club, and Trading Places International (known as TPI) operated exchange business, as well as Aston Hotels & Resorts, Inc. (referred to as Aston) and Aqua Hospitality, LLC (referred to as Aqua).

Vacation Ownership engages in the management of vacation ownership resorts; sales, marketing, and financing of vacation ownership interests; and related services to owners and associations. The Vacation Ownership operating segment consists of the management related lines of business of Vacation Resorts International (known as VRI), TPI, VRI Europe and HVO as well as the sales and financing of vacation ownership interests.

As of December 31, 2014, financial results for the company will reflect the realigned segment structure. Included with this press release is re-cast financial information for the first, second and third quarters of 2014 as well as four quarters of 2013 consistent with these realigned segments.

The Company will release its results for the fourth quarter and fiscal year ending December 31, 2014 on February 26th at 4:00 pm Eastern Time.

Exchange and Rental Financial Information

QTD QTD QTD YTD
Exchange and Rental

3/31/2014

6/30/2014

9/30/2014

9/30/2014

Revenue $ 130,088 $ 116,802 $ 120,217 $ 367,107
Cost of sales 49,025 44,782 44,186 137,993
Gross profit 81,063 72,020 76,031 229,114
Selling and marketing expense 14,432 13,824 14,641 42,897
General and administrative expense 24,719 25,540 25,334 75,593
Amortization expense of intangibles 1,829 1,751 1,739 5,319
Depreciation expense 3,611 3,694 3,587 10,892
Operating income 36,472 27,211 30,730 94,413
Amortization expense of intangibles 1,829 1,751 1,739 5,319
Depreciation expense 3,611 3,694 3,587 10,892
Net income attributable to noncontrolling interest (18 ) (9 ) (27 )
Other non-operating income (expense), net 17 (279 ) 535 273
EBITDA 41,911 32,377 36,582 110,870
Non-cash compensation expense 2,479 2,261 2,423 7,163
Acquisition related and restructuring costs 351 988 385 1,724
Less: Other non-operating income (expense), net (17 ) 279 (535 ) (273 )
Adjusted EBITDA $ 44,724 $ 35,905 $ 38,855 $ 119,484
QTD QTD QTD QTD YTD
Exchange and Rental

3/31/2013

6/30/2013

9/30/2013

12/31/2013

12/31/2013

Revenue $ 122,018 $ 112,884 $ 106,543 $ 100,944 $ 442,389
Cost of sales 39,292 36,338 34,881 35,051 145,562
Gross profit 82,726 76,546 71,662 65,893 296,827
Selling and marketing expense 13,609 14,106 12,794 12,591 53,100
General and administrative expense 21,996 23,738 23,156 25,013 93,903
Amortization expense of intangibles 1,266 1,266 1,291 1,303 5,126
Depreciation expense 3,577 3,611 3,417 3,529 14,134
Operating income 42,278 33,825 31,004 23,457 130,564
Amortization expense of intangibles 1,266 1,266 1,291 1,303 5,126
Depreciation expense 3,577 3,611 3,417 3,529 14,134
Net (income) loss attributable to noncontrolling interest (6 ) 1 (4 ) 9
Other non-operating income (expense), net (348 ) 1,480 (70 ) (635 ) 427
EBITDA 46,767 40,183 35,638 27,663 150,251
Non-cash compensation expense 2,414 2,418 2,440 2,469 9,741
Prior period item (3,496 ) (3,496 )
Acquisition related and restructuring costs 212 (45 ) 389 452 1,008
Less: Other non-operating income (expense), net 348 (1,480 ) 70 635 (427 )
Adjusted EBITDA $ 49,741 $ 37,580 $ 38,537 $ 31,219 $ 157,077

Vacation Ownership Financial Information

Vacation Ownership QTD QTD QTD YTD

3/31/2014

6/30/2014

9/30/2014

9/30/2014

Revenue $ 26,953 $ 26,726 $ 26,466 $ 80,145
Cost of sales 14,826 14,979 14,808 44,613
Gross profit 12,127 11,747 11,658 35,532
Selling and marketing expense 136 (15 ) 159 280
General and administrative expense 6,719 5,711 6,005 18,435
Amortization expense of intangibles 1,137 1,144 1,140 3,421
Depreciation expense 182 182 178 542
Operating income 3,953 4,725 4,176 12,854
Amortization expense of intangibles 1,137 1,144 1,140 3,421
Depreciation expense 182 182 178 542
Net income attributable to noncontrolling interest (961 ) (1,034 ) (800 ) (2,795 )
Other non-operating expense, net (153 ) (1 ) (24 ) (178 )
EBITDA 4,158 5,016 4,670 13,844
Non-cash compensation expense 368 371 395 1,134
Acquisition related and restructuring costs 887 181 457 1,525
Less: Other non-operating expense, net 153 1 24 178
Adjusted EBITDA $ 5,566 $ 5,569 $ 5,546 $ 16,681
Vacation Ownership QTD QTD QTD QTD YTD

3/31/2013

6/30/2013

9/30/2013

12/31/2013

12/31/2013

Revenue $ 12,863 $ 12,099 $ 12,613 $ 21,251 $ 58,826
Cost of sales 7,084 7,083 7,110 12,671 33,948
Gross profit 5,779 5,016 5,503 8,580 24,878
Selling and marketing expense 125 167 158 172 622
General and administrative expense 4,309 4,488 4,230 5,644 18,671
Amortization expense of intangibles 746 629 658 974 3,007
Depreciation expense 87 85 82 143 397
Operating income (expense) 512 (353 ) 375 1,647 2,181
Amortization expense of intangibles 746 629 658 974 3,007
Depreciation expense 87 85 82 143 397
Net income attributable to noncontrolling interest (565 ) (565 )
Other non-operating income (expense), net (171 ) (2 ) 5 (168 )
EBITDA 1,174 359 1,120 2,199 4,852
Non-cash compensation expense 144 168 169 206 687
Prior period item
Acquisition related and restructuring costs 540 645 1,051 1,223 3,459
Less: Other non-operating income (expense), net 171 2 (5 ) 168
Adjusted EBITDA $ 2,029 $ 1,174 $ 2,335 $ 3,628 $ 9,166

Consolidated Interval Leisure Group Financial Information

Interval Leisure Group QTD QTD QTD YTD

3/31/2014

6/30/2014

9/30/2014

9/30/2014

Revenue $ 157,041 $ 143,528 $ 146,683 $ 447,252
Cost of sales 63,851 59,761 58,994 182,606
Gross profit 93,190 83,767 87,689 264,646
Selling and marketing expense 14,568 13,809 14,800 43,177
General and administrative expense 31,438 31,251 31,339 94,028
Amortization expense of intangibles 2,966 2,895 2,879 8,740
Depreciation expense 3,793 3,876 3,765 11,434
Operating income 40,425 31,936 34,906 107,267
Amortization expense of intangibles 2,966 2,895 2,879 8,740
Depreciation expense 3,793 3,876 3,765 11,434
Net income attributable to noncontrolling interest (979 ) (1,034 ) (809 ) (2,822 )
Other non-operating expense, net (136 ) (280 ) 511 95
EBITDA 46,069 37,393 41,252 124,714
Non-cash compensation expense 2,847 2,632 2,818 8,297
Acquisition related and restructuring costs 1,238 1,169 842 3,249
Less: Other non-operating expense, net 136 280 (511 ) (95 )
Adjusted EBITDA $ 50,290 $ 41,474 $ 44,401 $ 136,165
Interval Leisure Group QTD QTD QTD QTD YTD

3/31/2013

6/30/2013

9/30/2013

12/31/2013

12/31/2013

Revenue $ 134,881 $ 124,983 $ 119,156 $ 122,195 $ 501,215
Cost of sales 46,376 43,421 41,991 47,722 179,510
Gross profit 88,505 81,562 77,165 74,473 321,705
Selling and marketing expense 13,734 14,273 12,952 12,763 53,722
General and administrative expense 26,305 28,226 27,386 30,657 112,574
Amortization expense of intangibles 2,012 1,895 1,949 2,277 8,133
Depreciation expense 3,664 3,696 3,499 3,672 14,531
Operating income 42,790 33,472 31,379 25,104 132,745
Amortization expense of intangibles 2,012 1,895 1,949 2,277 8,133
Depreciation expense 3,664 3,696 3,499 3,672 14,531
Net income attributable to noncontrolling interest (6 ) 1 (4 ) (556 ) (565 )
Other non-operating income (expense), net (519 ) 1,478 (65 ) (635 ) 259
EBITDA 47,941 40,542 36,758 29,862 155,103
Non-cash compensation expense 2,558 2,586 2,609 2,675 10,428
Prior period item (3,496 ) (3,496 )
Acquisition related and restructuring costs 752 600 1,440 1,675 4,467
Less: Other non-operating income (expense), net 519 (1,478 ) 65 635 (259 )
Adjusted EBITDA $ 51,770 $ 38,754 $ 40,872 $ 34,847 $ 166,243

CONFERENCE CALL

ILG will host a conference call on February 26th at 4:30 p.m. Eastern Time to discuss its results for the fourth quarter and full year 2014, with access via the Internet and telephone.

Investors and analysts may participate in the live conference call by dialing (866) 383-8009 (toll-free domestic) or (617) 597-5342 (international); Conference ID: 26944701. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for 14 days via telephone starting approximately two hours after the call ends. The replay can be accessed at (888) 286-8010 (toll-free domestic) or (617) 801-6888 (international); Conference ID: 92132656. The webcast will be archived on Interval Leisure Group’s website for 90 days after the call. A transcript of the call will also be available on the website www.iilg.com.

ABOUT INTERVAL LEISURE GROUP

Interval Leisure Group (ILG) is a leading global provider of non-traditional lodging, encompassing a portfolio of leisure businesses from exchange and vacation rental to vacation ownership. In its exchange and rental segment, Interval International and Trading Places International (TPI) offer vacation exchange and travel-related products to more than 2 million member families worldwide, while Hyatt Residence Club provides exchanges among its branded resorts in addition to its participation in the Interval Network. Aston Hotels & Resorts and Aqua Hospitality provide hotel and condominium rentals and resort management. In its vacation ownership segment, Vacation Resorts International, VRI Europe, Hyatt Vacation Ownership (HVO) and TPI provide management services to timeshare resorts and clubs, as well as homeowners’ associations. HVO also sells, markets, and finances vacation ownership interests. ILG through its subsidiaries independently owns and manages the Hyatt Residence Club program and uses the Hyatt Vacation Ownership name and other Hyatt marks under license from affiliates of Hyatt Hotels Corporation. Headquartered in Miami, Florida, ILG has offices in 16 countries and more than 6,000 employees. For more information, visit www.iilg.com.

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to: our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in the forward-looking statements included herein for a variety of reasons, including, among others: adverse trends in economic conditions generally or in the vacation ownership, vacation rental and travel industries; adverse changes to, or interruptions in, relationships with third parties; lack of available financing for, or insolvency of developers; consolidation of developers; decreased demand from prospective purchasers of vacation interests; travel related health concerns; changes in our senior management; regulatory changes; our ability to compete effectively and successfully add new products and services; our ability to successfully manage and integrate acquisitions; the occurrence of a change of control event under the master license agreement with Hyatt; our failure to comply with designated Hyatt(R) brand standards with respect to the operation of the Hyatt Vacation Ownership business; our ability to market vacation ownership interests successfully and efficiently; impairment of assets; the restrictive covenants in our revolving credit facility; adverse events or trends in key vacation destinations; business interruptions in connection with our technology systems; ability of managed homeowners associations to collect sufficient maintenance fees; third parties not repaying advances or extensions of credit; and our ability to expand successfully in international markets and manage risks specific to international operations. Certain of these and other risks and uncertainties are discussed in our filings with the SEC. Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this release may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of our management as of the date of this press release. Except as required by applicable law, ILG does not undertake to update these forward-looking statements.

GLOSSARY OF TERMS

Acquisition related and restructuring costs – Represent transaction fees, costs incurred in connection with performing due diligence, subsequent adjustments to our initial estimate of contingent consideration obligations associated with business acquisitions, and other direct costs related to acquisition activities. Additionally, this item includes certain restructuring charges primarily related to workforce reductions and estimated costs of exiting contractual commitments.

Adjusted EBITDA - EBITDA, excluding, if applicable: (1) non-cash compensation expense, (2) goodwill and asset impairments, (3) acquisition related and restructuring costs, (4) other non-operating income and expense (including loss on extinguishment of debt), (5) the impact of correcting prior period items, and (6) other special items. The Company’s presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

EBITDA - Net income attributable to common stockholders excluding, if applicable: (1) non-operating interest income and interest expense, (2) income taxes, (3) depreciation expense, and (4) amortization expense of intangibles.

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